Emerging Telematics Opportunities in Russia

A 2008 consumer survey by Frost & Sullivan found that 8 in 10 owners of navigation systems were likely to purchase the system again, while 54% of those who did not own a system said they were interested in buying one.

Some 48% of those surveyed reported interest in dedicated, portable navigation devices, while 29% said they would like their navigation system integrated in their phone or PDA.

Only 22% said they would be interested in a navigation device fixed in their vehicle.

“Navigation in Russia is purely an after-market feature rather than an OEM initiative,” says Praveen Chandrasekar, global program manager for telematics and infotainment at Frost & Sullivan.

More maps, please

Though many imported cars are fitted with navigation and other telematics devices, domestic Russian vehicle manufacturers have not followed suit.

One of the problems is the country’s lack of digital mapping. Currently, digital maps only cover key metropolitan areas, such as Moscow and St. Petersburg.

“Fully supported digital maps for all regions are needed to offer a rich navigation experience for the user,” Chandrasekar says. “Without proper mapping support, the local OEMs will not choose to offer navigation systems.”

Vehicle tracking as a growth area

Apart from navigation, vehicle tracking offers another potential area for growth. Russia has one of the highest car theft rates in the world. But, currently, after-market players dominate even this segment. Local OEMs have not yet started to offer their own vehicle-tracking systems.

This could change when Russia launches the ERA GLONASS satellite next year, the third generation of the GLONASS fleet of satellites, to boost navigation services. The GLONASS platform will include an eCall service, similar to Europe’s proposed eCall system.

In the first phase of the project, automobiles will be equipped with GLONASS receivers and emergency services will be outfitted to use geographic data. The service will be extended to GPS/GLONASS-enabled smartphones in the second phase.

A related project called Social GLONASS is aimed at providing emergency help to people with vision impairments, the elderly, and children.

When fully implemented next year, GLONASS will cover all of Russia.

Compatibility issues around Russia’s eCall

Though the Russians have said their GLONASS eCall service will be fully compatible with the European eCall service, more clarity is needed by the market players.

“Currently, everything is working on GPS,” says Chandrasekar. “Navigation product developers are not sure what sort of receivers they will have to include in the product. Will it be GPS receivers or will it be GLONASS receivers? Or will they have to provide dual-receivers that work with both GPS and GLONASS?”

While the Europeans are already discussing the regulatory framework for their pan-European eCall service, the Russians have yet to announce the regulations governing their eCall system.

Getting the pricing right

Nevertheless, the launch of eCall will open up new opportunities for fixed navigation devices in vehicles. According to a report by PricewaterhouseCoopers, Russia overtook Germany to become the largest automobile market in Europe in 2008, with 3.2 million vehicles sold.

Sales declined by 49% in 2009 due to global economic downturn. The numbers could well bounce back once the recovery kicks in, offering a potentially huge new market for navigation systems.

But pricing will be a tricky. “Consumers can get navigation features in a smartphone they can buy for $100,” Chandrasekar points out. “In contrast, an in-car navigation device typically costs many times more than that. The right pricing will be the key to lure customers to buy in-car systems.”

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